MADRID – Even though rental income is an attractive deduction item for income tax purposes, four out of ten Spanish homeowners who rent out their property still do not declare the income to the Tax Office.
The deadline for the 2020 income tax return started on Wednesday 7 April. In recent years, there has been some improvement in declaring rental income. For example, in 2004 63% were not declared, in 2010 that figure was 52%, and now it is around 40%. This information comes from the association of tax experts GESTHA. Furthermore, they compared the income tax data with the figures provided by the Spanish National Institute of Statistics INE on tenants and rental properties.
In 2010, the Inland Revenue warned that it could detect undeclared electricity consumption. The address of person completing the income tax return, must be stated and must be indicated whether the residence is owned or rented. In this way, the owners can easily be found via the tenants. And it works; six out of ten landlords are found this way. They receive warning letters from the tax authorities to declare their income.
Warning to declare rental income
GESTHA spokesperson José Maria Mollinedo points out “it is very easy for the Tax Authorities to find undeclared rentals. The Tax Authorities regularly send letters to warn home owners to declare income, also when it concerns tourist rentals. This can prevent greater suffering. Those who do not declare and are caught in the act have to pay tax on all income, without the 60% deduction, and also receive an additional penalty of 50%.